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Germany’s New Supply Chain Act – Part 4 of 4 – FAQs

This briefing is Part 4 of a series of briefings aiming at providing an overview of the key elements of the new German Supply Chain Due Diligence Act.

On 11 June 2021, the German parliament approved the Federal Act on Corporate Due Diligence Obligations in Supply Chains (“Gesetz über die unternehmerischen Sorgfaltspflichten zur Vermeidung von Menschenrechtsverletzungen in Lieferketten – Lieferkettensorgfaltspflichtengesetz – LkSG”)German Supply Chain Due Diligence Act.

Part 4 of our series of briefings highlights a couple of practical relevant questions including (i) the method to calculate the number of employees of a company, (ii) the risk of receiving cease and desist letters in cases of non-compliance, (iii) supply chain related disclosure obligations in capital market transactions, (iv) the interlink between the specific reporting obligations under the new Act and the “usual” non-financial disclosure obligations under the German Commercial Code, (v) enforcement risks and (vi) the risk of fines and the risk that regulators siphon off financial benefits. Finally, we consider what steps should be taken next to ensure compliance with the new regulations entering into force on 1 January 2023. 

Further questions on how to deal with the new rules will certainly arise in the next days, weeks and months. Our dedicated teams in Germany and around the world will be there to assist to comply with applicable supply chain regulations.

Speed read

The German Supply Chain Due Diligence Act will enter into force on 1 January 2023. Companies should carefully consider what needs to be done to ensure compliance from day 1 given that it is a complex challenge to identify the relevant risks and to take appropriate counter-measures needed to comply with the new set of rules.

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